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Comment by gonzobonzo | Hacker News Reader

> Tax credits seem to make sense for an EV company?

That's one of the things that I've found odd. A lot of people that very strongly support things like tax credits for EV cars, in order to fight climate change, will then turn around and talk about how terrible they are when they're actually used, such as in the article here. A lot of times people don't seem to have a consistent view of what they actually want, and will be outraged by the results of policies they themselves supported.

One can only imagine the headlines if these environmental credits were cancelled ("anti-environmental actions are going to bring about climate change and doom us all").

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I may be the only one, but I was under the impression this whole time that all EV tax credits were for consumers who buy EVs, not companies who sell them.

It amounts to the same thing, no?

Definitely not, no. Credits on profits incentivize short term profit taking, while credits in products incentivize number of units shipped. The second is much better for society. Think about it from the perspective of a company deciding between selling low margin cheap EVs in the short term before process efficiencies kick in, or selling expensive EVs now.

The idea is to stimulate both supply and demand. Credits for consumer only stimulate demand which may not be enough to compel literally hundreds of billions of dollars worth of CapEx, not to mention opportunity cost.

Consumer credits stimulate demand by increasing the cost consumers are willing to pay for a vehicle, shifting the demand curve, and greatly increasing the profitability in selling cars, provided it is done at scale. It can most definitely compell hundreds of billions of dollars of CapEx, and in many ways it's more effective than a tax break, because it will reduce losses if the venture never ends up being profitable (unlike a tax break which will only be worth it if the venture is eventually profitable, so there is less risk), and if it provides future market share through investments in the low end, especially in international competition, it can end up spurning more CapEx as it makes the more capital-intensive strategy more viable.

It isn't a tax credit for making profits. It's a tax credit for making EVs. The reason there are credits for both consumers and manufacturers is that the manufacturer credits provide an incentive to build EV factories in the US, even if some of the cars are for export.

But we don't care about more profits, we care about more EVs. If you want to create an incentive to make EVs that are exported then you can make one, for example by subsidizing production equipment or by providing a per-unit sold refundable tax credit.

> But we don't care about more profits, we care about more EVs.

Which is why the tax credit is for making EVs.

you're just circling back to the GP's last comment, without refuting that comment.

>Credits on profits incentivize short term profit taking, while credits in products incentivize number of units shipped. The second is much better for society.

There aren't credits on profits. There are credits for making EVs (which the manufacturers get) and for buying EVs (which the customers get).

They are, by definition, credits on profits made from selling EVs, and not from selling EVs. If Tesla made EVs without making a profit they wouldn't have received a penny.

They're credits against taxes. Since corporate income taxes are on profits, that implies that there would have to be some profits in order for there to be taxes to take the credit against, but that doesn't make them credits on profits. If they had made more profits without making more EVs, they wouldn't have gotten more credits. If they had made more profits but offset the taxes with some other credits then they might not have been able to use these, not because they didn't make enough profits but because they didn't pay enough taxes.

And this works the same for the consumer EV credits; you can't get them unless you were paying that much in taxes.

If your point is that non-refundable credits are stupid, yes. All credits should be refundable. But that doesn't have anything to do with whether they're credits for the manufacturer or the consumer.

Making the consumer credits non-refundable is actually worse, especially for the credits on used EVs. Because then you can't get the credit if you're unemployed or a student or otherwise don't make enough money to be paying the value of the EV credit in taxes, so it becomes a tax credit for the affluent that the poor aren't eligible for.

There were vehicle sourcing credits in the Inflation Reduction Act, which are granted per kWh of battery with sufficient domestic mineral content. Was $4,000/vehicle if I recall.

lol! No no, this America! Automakers are actually buying and selling EV credits to eachother. Tesla often would have been in a loss position and possibly bankrupt if the big 3 auto makers weren’t buying credits from Tesla so they could get their fleet averages down and keep making trucks and SUVs.

They are, but typically what automakers will do is assume the tax credit on your behalf and just give you $7,500 off the price of your car up front. They will then collect $7,500 come tax day.

That's a win-win all around, the consumer saves $7,500 off the list price up front, they have to finance less etc, and Tesla gets a tax credit.

Those are different credits. There are (if they didn't expire yet, don't remember) federal tax credits for buyers, but separate system is for manufacturers where if you make cars, you need to make some of them EV, or buy credits from somebody who does (e.g. Tesla).

I'd imagine that they are different people. Arguing with crowds can be a bit frustrating because the crowd will argue strongly in favour of something, then the winds shift and the crowd argues strongly against it without anyone really changing their minds. Ditto strongly believing contradictory things.

If we want to talk specifically about social media sites like HN, the conversation is really steered by the up/down votes rather than the people in the threads. Every possible perspective tends to get a comment then the gestalt decides which ones they like. The upvoters anonymous and the downvoters are often ... a weird crew with motives that are often hard to divine.

>I'd imagine that they are different people. Arguing with crowds can be a bit frustrating because the crowd will argue strongly in favour of something, then the winds shift and the crowd argues strongly against it without anyone really changing their minds. Ditto strongly believing contradictory things.

This is a good point. It took me a while to realize this. It is like "winds" are magnified and out shout the prior wind.

A similair concept politically is when some people want to punnish you for some other people holding it wrong or something.

In reality, what is more damaging for the environment?

Replacing a 2019 Toyota Rav4 with a 2025 Tesla in North America, or.....

Replacing a 1985 VW Jetta with a 2019 Toyota Rav4 in India?

I see YouTube videos all the time where people in third world countries are using turn of the century hit-and-miss engines to power things like water pumps or machine tools. These countries are leaking countless gallons of oil and fuel into the ground using engines and equipment that are over 100 years old when Habor Freight sells brand new engines for $150.

To me, the ease with which you can sell a new car to a yuppy in the USA (who doesn't even need a new car) is baffling. Dollar for dollar, there is so much low hanging fruit. Don't get me wrong, I want to see first world countries lead the charge, but yuppys need to be more realistic in their "environmental" decision making. There is nothing frugal or environmental about having a 20" touch screen in the dash, or replacing your >5 year old car.

The American Rav4 is probably doing a lot more miles/year than the Indian Jetta. So it'll emit a lot more CO2.

Every car that is sold retires an old one. And the one it retires will be the least valuable.

This happens becauase the person who buys a new car sells their old one to someone else, who sells their old one to someone else, and so on down the chain.

The oldest cars from America go to other cheaper markets replacing the cars in use there.

I don't think anyone in India is buying old American cars

Especially since India drives on the left, and hence uses right-hand drive vehicles. American vehicles are almost all left-hand drive, which are illegal to drive in India – you'd either have to pay for an expensive conversion, or manage to get a rare legal exemption (reserved for historical vehicles, foreign diplomats and official visitors, and other such special cases) [0]

You can import used cars into India, but you'd generally be bringing them in from a left-hand drive market such as Japan, Australia or the UK. Plus, Indian law says import used cars have to be less than three years old, because India doesn't want to become a dumping ground for other countries old vehicles (which also undermines their local car manufacturing sector) [1]

[0] https://auto.hindustantimes.com/auto/cars/g20-summit-can-one...

[1] https://www.acko.com/car-guide/how-to-import-foreign-cars-to...

Does this actually happen?

With some exceptions, there’s going to be a point where a used car is not worth the trouble to ship it somewhere.

And Americans love their huge ass cars. I can’t see many cheaper markets wanting to use an American car, just for the fuel cost alone.

I bet the cars get trashed for scrap or parts.

> Does this actually happen?

Absolutely it does. If you live near the Mexican border of the US, it’s extremely common to see older cars being towed headed south, presumably to Mexico. It’s not particularly expensive to drive them down to the border.

> I bet the cars get trashed for scrap or parts.

Only the least valuable and oldest ones that other countries don’t work. That means you’re overall moving up the modernness of the fleet. Presumably with better fuel economy, lower emissions, and fewer problems.

> presumably to Mexico.

Also to Belize and other parts of Central and South America. They don't all stop in Mexico.

True enough. I suspect many aren’t going to South America since you can’t drive them there… but you can certainly drive all the way to Panama. If you want to head past Panama seems like it’d be easier to ship them directly from the US to their final destination.

>Every car that is sold retires an old one.

I'm about to purchase my first car, a Tesla! Whose vehicle will be retired by my purchase?

Someone who has already bought their last car and it ends up sitting in a garage forever.

> The oldest cars from America go to other cheaper markets replacing the cars in use there.

Why are you assuming other cars are being replaced? Those other markets are not at saturation. What is being replaced could very well be a bicycle.

The efficiency improvements are generally going to start in the more developed countries and eventually reach elsewhere. But this is less certain with EVs.

> These countries are leaking countless gallons of oil and fuel into the ground using engines and equipment that are over 100 years old

Pre-1925 engines must be a minuscule fraction of all engines in active use, even in poor countries.

"India is on track to become the largest EV market by 2030, with rise in investment over the next 8-10 years."

https://www.ibef.org/industry/electric-vehicle

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